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Popular Media In a recent article[1] Joe Kattan and Tim Muris (K&M) criticize our article[2] on the predictive power of bargaining models in antitrust, in which we used two recent applications to explore implications for uses of bargaining models in courts and antitrust agencies moving forward.
In a recent article Joe Kattan and Tim Muris (K&M) criticize our article on the predictive power of bargaining models in antitrust, in which we used two recent applications to explore implications for uses of bargaining models in courts and antitrust agencies moving forward. Like other theoretical models used to predict competitive effects, complex bargaining models require courts and agencies rigorously to test their predictions against data from the real world markets and institutions to which they are being applied. Where the “real-world evidence,” as Judge Leon described such data in AT&T/Time Warner, is inconsistent with the predictions of a complex bargaining model, then the tribunal should reject the model rather than reality.
Read the full piece here.
Popular Media The recent increase in economic concentration and monopoly power make the United States “ripe for dictatorship,” claims Columbia law professor Tim Wu in his new book, The Curse of Bigness.
The recent increase in economic concentration and monopoly power make the United States “ripe for dictatorship,” claims Columbia law professor Tim Wu in his new book, The Curse of Bigness. With the release of Senator Elizabeth Warren’s proposal to “break up” technology companies like Amazon and Google, fear of bigness is clearly on the rise. Professor Wu’s book adds a new dimension to that fear, arguing that cooperation between political and economic power are “closely linked to the rise of fascism” because “the monopolist and the dictator tend to have overlapping interests.” Economist Hal Singer calls this the book’s “biggest innovation.”
Regulatory Comments We write to address a crucial question relevant to your upcoming, March 12 hearing on “The State of Competition in the Wireless Market: Examining the Impact of the Proposed Merger of T-Mobile and Sprint on Consumers, Workers, and the Internet.”
The International Center for Law and Economics (ICLE) is a nonprofit, nonpartisan research center whose work promotes the use of law & economics methodologies to inform public policy debates. We believe that intellectually rigorous, data-driven analysis will lead to efficient policy solutions that promote consumer welfare and global economic growth.
We write to address a crucial question relevant to your upcoming, March 12 hearing on “The State of Competition in the Wireless Market: Examining the Impact of the Proposed Merger of T-Mobile and Sprint on Consumers, Workers, and the Internet”: the likely effects on consumer welfare that a “4-to-3” merger among the largest US mobile carriers would have. We are currently working on a comprehensive literature review of economic studies looking at such mergers in other developed countries. Although that review is not yet completed, this letter shares several notable preliminary conclusions for consideration by the Subcommittee.
Click here to read the full letter.
TOTM The US Senate Subcommittee on Antitrust, Competition Policy, and Consumer Rights recently held hearings to see what, if anything, the U.S. might learn from the approaches of other countries regarding antitrust and consumer protection.
The US Senate Subcommittee on Antitrust, Competition Policy, and Consumer Rights recently held hearings to see what, if anything, the U.S. might learn from the approaches of other countries regarding antitrust and consumer protection. US lawmakers would do well to be wary of examples from other jurisdictions, however, that are rooted in different legal and cultural traditions. Shortly before the hearing, for example, Australia’s Competition and Consumer Protection Commission (ACCC) announced that it was exploring broad new regulations, predicated on theoretical harms, that would threaten both consumer welfare and individuals’ rights to free expression that are completely at odds with American norms.
Written Testimonies & Filings FTC Hearings on Competition & Consumer Protection in the 21st Century. Comments of the International Center for Law & Economics: The Continued Viability and Flexibility of the Consumer Welfare Standard, and the Weakness of Its Alternatives. Hearing # 5 (Nov. 1, 2018). Submitted December 31, 2018.
The consumer welfare standard (“CWS”) has been the subject of much discussion lately, largely driven by a seeming uptick in criticism of the standard. This criticism falls generally into two camps. On the one hand, the CWS is understood to be the broadly correct, if imperfect, touchstone for antitrust enforcement. Proponents of this view support the consumer-focused approach to antitrust but nevertheless often recognize the inherent shortcomings of the CWS (endemic to any general legal principle applied in complex and evolving economic circumstances), and particular areas where its operationalization can and should be improved (e.g. accounting for innovation harms or properly defining who counts as a “consumer”).
On the other hand, the CWS is objected to per se by some critics as an improper or incurably deficient guiding principle for antitrust enforcement. Proponents of this view see the CWS as inconsistent with the proper goals of antitrust, which should, they contend, focus on control of threats to the “process of competition” (as opposed to the welfare of consumers). Many of the adherents to this perspective also contend that antitrust should address private-sector economic threats to the democratic process more broadly. In both cases a key component of the antipathy to the CWS is that it has allowed for the sustained presence of large corporations in the polity — a presence that is alleged to threaten, simply by its existence, both competitive and democratic welfare.
Yet, as discussed in this comment, the CWS continues to be a vital component of modern antitrust analysis. Despite the characterization of its critics, the CWS is not a single tool which gauges all conduct with a simplistic price analysis. Rather, it is a methodology by which to arrange the array of legal and economic tools that guide antitrust enforcement and adjudication and to evaluate their efficacy.
For example, and as discussed at length in this comment, the CWS is completely capable of relying upon the tool of presumptions for certain modes of analysis. Yet presumptions are neither good nor bad per se, but are merely a single tool, the utility of which depends upon the method of use. When applied within the CWS framework, presumptions can serve procompetitive ends. By contrast, when employed to satisfy the ends of advocates who wish to impose hypothetical “ideal” structures on the economy, presumptions can be — and often are — destructive.
Click here to read the full comments.
Scholarship On November 14, 2018, the Federal Trade Commission (“Commission”) issued an opinion condemning as an antitrust violation trademark settlement agreements between 1-800 Contacts (“1-800”) and fourteen online sellers of contact lenses.
On November 14, 2018, the Federal Trade Commission (“Commission”) issued an opinion condemning as an antitrust violation trademark settlement agreements between 1-800 Contacts (“1-800”) and fourteen online sellers of contact lenses. The settlement agreements arise from trademark infringement claims brought by 1-800 against these online rivals. FTC Chairman Joseph Simons authored the Commission’s opinion, joined by the two Democratic Commissioners, Rohit Chopra and Rebecca Slaughter. In finding that the settlement agreements violated Section 1 of the Sherman Act, Chairman Simons and the majority commit two critical errors—one legal, the other economic—that render the Commission’s opinion, in our view, highly vulnerable to reversal upon its inevitable appeal. With respect to the legal infirmity, the Commission incorrectly concludes the challenged agreements are “inherently suspect,” and applies a truncated rule of reason analysis to assess whether the agreements harmed competition. As explained in Commissioner Noah Phillips’ dissent, a truncated analysis is not supported in this case either by judicial experience or economic learning, and was thus inappropriately applied. The second error is application of an economic analysis to claim the agreements have caused anticompetitive effects that falls woefully short of evidence of consumer injury. We predict reversal by an appellate court.
Written Testimonies & Filings On December 19, 2018, ICLE President and Founder, Geoffrey A. Manne testified before the US Senate Committee on the Judiciary's Subcommittee on Antitrust, Competition Policy and Consumer Rights to discuss the differences between the antitrust regimes in the US and the EU, and the inadvisability of importing EU policy into the US.
On December 19, 2018, ICLE President and Founder, Geoffrey A. Manne testified before the US Senate Committee on the Judiciary’s Subcommittee on Antitrust, Competition Policy and Consumer Rights to discuss the differences between the antitrust regimes in the US and the EU, and the inadvisability of importing EU policy into the US. Mr. Manne noted:
An increasing number of scholars and advocates have argued recently that US antitrust law should be “reformed” in order to invigorate antitrust enforcement and sidestep the judicially-imposed constraints that have developed over antitrust’s 100 year history. Explicitly or not, these efforts seek to bring about a shift in US antitrust that would make it more closely resemble competition law in Europe. While these scholars and advocates assert that their proposals would improve economic conditions in the US, economic logic and the apparent reality from Europe suggest otherwise. *** Although the differences between US and EU antitrust law can appear minor or superficial at a glance, even small differences can have important consequences, and the cumulative effect of the differences is significant. Although the Commission is often quite careful to couch its decision-making in economic language, in practice, analytical economic administration of antitrust is far from the norm. *** Despite asserting that EU competition law is “better” than that of the US, and that emulating the EU will improve economic conditions in the US, references to the likely outcome — positive or negative — of the expanded antitrust experiment in the EU are not provided. Moreover, as noted below, to the extent the European experience is assessed at all, these assessments are manifestly unreliable.
An increasing number of scholars and advocates have argued recently that US antitrust law should be “reformed” in order to invigorate antitrust enforcement and sidestep the judicially-imposed constraints that have developed over antitrust’s 100 year history. Explicitly or not, these efforts seek to bring about a shift in US antitrust that would make it more closely resemble competition law in Europe. While these scholars and advocates assert that their proposals would improve economic conditions in the US, economic logic and the apparent reality from Europe suggest otherwise.
***
Although the differences between US and EU antitrust law can appear minor or superficial at a glance, even small differences can have important consequences, and the cumulative effect of the differences is significant. Although the Commission is often quite careful to couch its decision-making in economic language, in practice, analytical economic administration of antitrust is far from the norm.
Despite asserting that EU competition law is “better” than that of the US, and that emulating the EU will improve economic conditions in the US, references to the likely outcome — positive or negative — of the expanded antitrust experiment in the EU are not provided. Moreover, as noted below, to the extent the European experience is assessed at all, these assessments are manifestly unreliable.
The full testimony documents the many relevant differences, in particular the way that competition law in the EU and its member states vests enforcers with broad discretion. By comparison, the US standards impose requirements of conducting careful economic analysis in order to prove a competitive harm. The net effect is that the US antitrust approach provides both certainty for firms and consumers, and discipline for enforcers.
The oral testimony is available here.
The full video of the hearing is available here.
The full testimony is available here.
Presentations & Interviews ICLE Senior Scholar Joshua Wright participated in the FTC’s Hearing #3: Multi-Sided Platforms, Labor Markets, and Potential Competition on the panel, Do the U.S. and . . .
ICLE Senior Scholar Joshua Wright participated in the FTC’s Hearing #3: Multi-Sided Platforms, Labor Markets, and Potential Competition on the panel, Do the U.S. and Europe Treat Competition Cases Involving Platforms Differently? Read the full transcript here. Video of the event is embedded below.
